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‘Free’ Money: How Students Mine Cryptocurrency in Their Dorm Rooms

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Last month, reports surfaced on crypto mining research conducted by tech conglomerate Cisco with the following headline: “College kids are using campus electricity to mine crypto.”

Indeed, many students don’t have to worry about paying power bills, as per their university housing contracts, which tend to cover electricity expenses. That “free” power allows them to host cost-efficient mining rigs, where the only expense is the actual hardware. It almost seems too good to be true: Mining students receive a passive income, which can potentially cover the purchase of a few textbooks — or even pay for the whole semester and more.

However, there’s a catch: No electricity is actually free, and someone ultimately has to pay the price.

How popular is mining among students?

Cisco’s security researchers investigated cryptocurrency mining activity across various industry verticals. The research was carried out with the company’s cloud security platform Umbrella, which monitors clients’ network connections to screen malicious activity, allegedly revealing incidents of crypto mining.

According to the findings, university campuses are the second-biggest miners of virtual currency across industry verticals at 22 percent, second only to the energy and utilities sector, with about 34 percent.

As Cointelegraph reported, miner revenues began to wane in 2018 (the last full year for statistics), thanks to the crypto winter and its attendant price drop. That made mining less profitable. But hash rates have continued to increase, indicating that the global mining pool continues to grow, even as individual miners come and go.

Cisco threat researcher Austin McBride explained the trend to PCMag, saying that “you leave [the mining rig] running in your dorm room for four years, you walk out of college with a big chunk of change.”

While running mining rigs in dorm rooms, students purportedly avoid electricity costs associated with cryptocurrency mining profitability, said McBride, adding:

“Mining difficulty for a lot of coins is very high right now — which means it costs more for electricity and internet than the profit you can produce from mining those coins. If you don’t have to pay for those costs, then you are in a really good spot for making money on the university’s dime.”

Cointelegraph reached out to Cisco and Cisco Umbrella to clarify which campuses were monitored, but has yet to receive a response.  

A similar report was conducted earlier in March 2018, when cyber attack monitoring firm Vectra found out that both intentional cryptocurrency mining and cryptojacking was becoming more prevalent on college campuses than in any other industry.

As per Vectra, universities are not able to monitor their networks as closely as large corporations with high-budget IT departments, “at best [advising] students on how to protect themselves and the university by installing operating system patches and creating awareness of phishing emails, suspicious websites and web ads.”

Students who take advantage of this “free power,” in turn, are “simply being opportunistic as the value of cryptocurrencies surged over the past year,” Vectra’s blog post stated. Matt Walmsley, Europe, Middle East and Africa director at Vectra, told Cointelegraph that, while the scope of their research was international, he cannot disclose which universities participated in the study:

“The data was provided by from education establishments around the world on the understanding that any identifying information would remain anonymous.”

Therefore, while it is difficult to pinpoint the hot spots for college virtual currency mining on the map, the phenomenon seems to be quite popular overall. According to the 2019 Vectra report issued earlier this year, “cryptocurrency mining has surged in popularity with students and criminals, particularly among universities with large student populations.”

Is it really that simple?

One of the main things about mining in university housing conditions is that it has to be discreet — otherwise, the wardens might hear the noise and start investigating. Mark D’Aria, founder and CEO of Bitpro, a New York-based installation and mining operation management firm, told Cointelegraph:

“I suspect the vast majority of mining from college campuses isn’t from what you would think of as mining ‘rigs’ — those giant machines with multiple GPUs [graphics processing units], purpose built for mining. ASICs [application-specific integrated circuits] are also certainly going to be extremely rare simply because they’re so loud and hot that no one is going to tolerate them in their dorm room for very long. The student is going to need to explain that, and he’s not going to get away with it for long.”

Instead, most of the mining seems to be coming from students’ old-fashioned PCs, the Bitpro CEO suggested. Notably, casual machines could provide their owners with a moderate income even during the current, bearish market. Given that additional electricity-related expenses are covered by a third-party, of course. According to D’Aria:

“A gaming rig with a single high end GPU could produce maybe $1/day. But even a run of the mill laptop could produce a few cents as well. The important thing to recognize is that even though $1/day is small — if you don’t have to pay for electricity, there’s no reason for someone with a gaming rig or reasonably powerful laptop *not* to mine. It’s literally free money.”

Moreover, generating cryptocurrency with a computer does not necessarily require substantial technical skills and knowledge. “It’s extremely easy to do with services such as NiceHash [a crypto cloud mining marketplace], which can be set to automatically mine when you’re not using your PC like a screen saver,” D’Aria added.

Indeed, Tom (a pseudonym to maintain confidentiality), a University of Mississippi pharmaceutical sciences student, told Cointelegraph that he used NiceHash with his gaming PC to mine Bitcoin for about two months, but soon decided to abandon the idea because of the continuously high workload and rising GPU prices:

“I was able to make about $120 USD if the price of bitcoin had stayed at $15,000. With bitcoin currently around $4,000 USD it may be profitable, considering I was getting free electricity. However, because of the strain on the system, plus the overinflated prices of GPUs, I wouldn’t do it anymore.”

Tom specified that, being a resident advisor in the dormitory, he was able to make inroads with the local maintenance assistant. That allowed him to make sure that his floor had sufficient air conditioning to host a miner:

“It would be impossible to tell if I had my PC on all the time, especially since it was a huge, 11- story building.”

Tom’s room felt chilly during the winter months, so additional heat was actually useful. He said, “I just used my computer instead of a space heater.”

However, sometimes, mining students get exposed. Ken (a pseudonym to maintain confidentiality), an Arizona State University undergraduate who studies applied physics, showed Cointelegraph a screenshot of an alleged email from a university staff member. In it, Ken was being informed that the security team “has detected a coin miner program” on two of his devices.

“We would like you to either uninstall the programs, or run a virus scan in the event that you were unaware of these programs, as this is indicative of malware on your devices,” it stated.

Ken indeed was using NiceHash at the time, as he confirmed to Cointelegraph. After consulting with fellow miners on the r/BitcoinMining subreddit, he decided to use a virtual private network (VPN) whenever he was mining, saying: “I already had one, and I made sure that it turned on startup and the internet kill switch was active so they couldn’t track me.”

However, once Ken had managed to mine “a couple of hundred dollars,” NiceHash was hacked, and the student lost a large percentage of his funds, as he hadn’t yet moved them to a private wallet.

Chris Partridge is a computing security graduate from the Rochester Institute of Technology (RIT), who also mined cryptocurrency during his time in college, starting in 2015 and continuing until mid-2016. “I was curious about Bitcoin and that seemed like a good way to learn,” he told Cointelegraph. His setup was a bit more advanced compared with Tom and Ken, as he used “a couple” of Antminers, a BFL Monarch and a Prospero X1. Consequently, the amount of heat produced by his equipment was significantly higher:

“None of them [the mining rigs] were remotely current-gen even at the time, and all of them were heavily underclocked/undervolted/modded to be cooler and quieter. Living up in Rochester [New York), where it was freezing all the time, we had our window open 24/7 (even during blizzards!) and the miners pointed out into it, or else it became too hot in our living areas very quickly. It was a bit of a strain for my roommate and I, but he was a good sport about things.”

Partridge said that he was never caught in the act, despite a couple of room checks that occurred due to unrelated reasons. “Nobody seemed to care,” he said. “Especially since it was a very small operation — I suppose I came off as a bit eccentric, but no further investigation was prompted.”

Even though it wasn’t a profit-focused endeavor for the former RIT student, he walked away with around 0.4 BTC, which he then sold for a hefty sum of $6,000. The earnings came at just the right time: Partridge needed cash that would carry him through to an internship. After spending the money on general living expenses for a few months, he even had some left over for nonessential shopping:

“I also bought a Roomba, because if there’s anything I’m going to spend profits from magic internet money on, it’s a Roomba.”

There are even larger success stories: Marco Streng, co-founder and CEO of Genesis Mining, a large cloud mining company whose farms are located across several countries, claims that he essentially started his business out of a dorm room back in 2013. He declined to specify which university he went to, however, saying that it’s “the same anywhere in the world.”

“There was this kind of sauna atmosphere in my 10-13 square meter room, and the noise was really loud,” he told Cointelegraph. “We tried to mitigate it by putting some pillows over the miner and put it closer to the window to cool it down.”

Streng said that, while the uproar was attracting attention, his neighbors didn’t seem disturbed. “I mean, I found it annoying, but it was a trade-off for me,” he added. “I was excited, passionate, and there was an economical aspect — it created some money.”

Around 2014, Streng realized that the local student community had started to actively set up their own mining rigs across campus. “The rumour was spreading, so it [mining] got some traction,” he recalled. “The electricity bill of the student dorm went up quite significantly.”

When crypto market began growing and Streng’s activity became increasingly profitable, he realized that he could run “a few thousand of those machines,” establishing a mining operation on an industrial scale.

“That lead to the creation of Genesis Mining, one of the largest mining companies,” Streng told Cointelegraph. “I’m really happy that I did that in my dorm and found that opportunity. Otherwise, it would never have come this far.”

How legal and ethical is that?

While no university seems to have a specific policy in regard to cryptocurrency mining on its premises, in January of 2018, Stanford University issued a public warning against crypto mining on campus, arguing that school resources “must not be used for personal financial gain.” The warning also cited the university’s chief information security officer:

“Cryptocurrency mining is most lucrative when computing costs are minimized, which unfortunately has led to compromised systems, misused university computing equipment, and personally owned mining devices using campus power.”

Indeed, many universities seem to prohibit the use of their resources for personal financial gain — including the ones observed in this article. RIT’s code of conduct for computer use, for instance, states the following:

“No member of the RIT community may use an RIT computing account or any communications equipment that is owned or maintained by RIT to run a business or commercial service or to advertise for a commercial organization or endeavor. […] Consistent with other specific policies, members of the RIT community should not waste university resources or use them for personal benefit or for the benefit of a non-university entity.”

However, not having specific rulesets for cryptocurrency mining might actually induce tax problems for educational institutions who (unwillingly or not) host such activity on their premises. As Selva Ozelli, international tax attorney and CPA, told Cointelegraph:

“Given that electricity is usually included in a student’s tuition or rent, Universities would need to set policy as to whether they will allow cryptocurrency mining on campus premises or not or whether students should be charged extra for electrical expenses relating to cryptocurrency mining. If Universities do not set proper policy in this regard, they could subject themselves to tax problems. Because section 4, Q&A-8 of Notice 2014-21 states that cryptocurrency mining which is treated as a service activity should be treated as ordinary income in the year it is mined, and the expenses of mining — including electrical charges — deducted as incurred based on the matching of income and expenses.”  

From an ethical point of view, the situation is also quite complex, and opinions vary even among those who benefited from mining on campus.

“I pay to have the room and since no explicit details in my contract punished overuse of electricity I figured I was fine, especially since I would have had to use a space heater anyway because students couldn’t control the temperatures in their own rooms,” said Tom from the University of Mississippi, denying that he was in the wrong for setting up a mining rig in his room.

Rochester Institute of Technology’s Partridge was more critical. “I don’t believe it’s ethical to mine at scale on college campuses,” he told Cointelegraph. “The electricity being ‘free’ to me isn’t the same as the electricity being free, unfortunately.” The former RIT student recalled that he burned around $200 while mining in his dormarty, “assuming they get pretty solid commercial electrical rates.” He continued:

“Most people who claim that mining on campuses is ethical don’t take into account an important second variable: this is not without risk. Student housing isn’t designed to accommodate large quantities of electronic equipment, and couldn’t suppress or otherwise contain electrical fires – that could easily lead to massive property damage and loss of life.”

Streng, the Genesis Mining CEO, believes that, while students can contribute to the decentralized network via mining, they shouldn’t exploit the resources of their universities and inform the local administration, if possible. “I think it’s great if a student wants to do it [mine in his/her room] and is excited about it,” he said. “But of course they have to pay their bills.” He continued:

“The new side-effect of the whole cryptocurrency idea is that someone living in a small room can turn electricity to money. There are many institutional setups — not only in education — when someone is paying for the electricity of a specific area, while residents have to pay a flat contribution no matter how much electricity they consume. I think those providers should be aware of these possibilities now and that people can make use of them. They should respect that and draft it into their agreements.”

Therefore, if universities continue to largely overlook mining on their premises, the phenomenon is likely to stay, allowing students to at least earn some beer money.

“I can’t imagine any college student is going to turn down $30/month or even $5/month,” said D’Aria of Bitpro. “Even though they’re dealing with small amounts on an individual basis, dorm room mining is introducing cryptocurrencies to a whole generation of young adults. It doesn’t take them long to figure out how easy and useful it is to use something like Ethereum to split the cost of a 12 pack of natty ice — particularly when there’s no credit card statement their parents can keep an eye on.”

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Bitcoin Bull Market Gets Everyone Hyped, Parabolic Trend Currently Present – Is It Too Soon Yet?

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Bitcoin Bull Market Gets Everyone Hyped, Parabolic Trend Currently Present - It It Too Soon Yet?

Bitcoin Bull Market Gets Everyone Hyped, Parabolic Trend Currently Present - It It Too Soon Yet?

Last weekend’s Magical Crypto Conference was and continues to be highly spoken of. One event that took place was Charlie Lee’s success in selling unique Litecoin collectibles, which has grabbed the attention of many, as reported by Bitcoin Exchange Guide (BEG).

Another interesting thing about the Magical Crypto Conference, which pokes fun at the current bull market, is the presence of an actual bull! As per Bloomberg, a real-life bovine named “Little Dude” supposedly greeted crypto fanatics. With faith in Bitcoin (BTC) either never lost or regained, many have been trying to understand what’s to come for BTC in the future.

According to the CEO of crypto exchange, eToro, Yoni Assia, “A lot of people say, “party like it’s 1999,”” which might be a reference to 2017’s ultimate and popular bull run. That year saw BTC experience a 1400% increase in prices alone, with many calling it “digital gold,” writes the news platform.

This month has treated BTC well, as its price has seen a relative spike in prices. Interestingly, the current shape of its trend is an upward trending parabola. This was noted in one of BEG’s recent posts, where crypto trader, DonAlt noted that if BTC’s prices don’t go below the 6,400 mark, then the bull market is here for stay.

bitcoin-bull-market-price-charts

bitcoin-bull-market-price-charts

News outlet U Today also reported on the presence of parabolic trends. In particular, it was noted that Chief Analyst at eToro, Mati Greenspan believes that it’s normal for BTC to experience such a move. He supposedly gave the example of BTC’s 85% drop in value as travelling down a parabola.

As per U Today, Greenspan trusts that:

“The market is at the moment about to begin a new rise, the start of which the community has witnessed recently.”

As for the recent drop in BTC, Greenspan does not seem to be concerned by it as he believes it is a natural part of growth.

Bitcoin’s Recent Value Goes Down: Crypto Bulls and Bear At Tug of War for Future BTC Prices

In a recent Bitcoin Exchange Guide (BEG) report, the reasons why Bitcoin’s (BTC) transaction fees increased were expounded upon. Of the three reasons, one that primarily stood out was that of the sell order took place on BitStamp, ultimately driving down BTC’s value to the lower end of the $6,000 ranges.

As it turns out both the crypto bulls and bears have been standing on opposite ends of the pole in terms of what’s to come for BTC’s prices reports CCN. In particular, it was noted that bulls trust BTC to reach 5-digit price levels (i.e. USD10,000), while bears trust that it will go down again before it can go back up.

CCN documented a number of tweets from known crypto fanatics and experts taking on their respective positions. Here’s an overview of what has been shared.

The first is crypto trader from Twitter, DonAlt who shared the following tweet:

To which, blockchain innovator, Vinny Lingham retweeted and shared, “I concur”. A conversation also seemed to have stirred up in the comments between Twitter user, Tom Gloor and DonAlt, where the former asked at which point or resistance level DonAlt thought the prices will go back up considering the downward trend.

In response, he said that said downward trend no longer exists and that it is “at worst sideways”.

In addition to his $10,000 claims, DonAlt also shared a graph of Bitcoin taking on an upward parabolic trend, noting that this is a sign that the bull is for here to stay given that it holds at the 6,400 mark and does not dip any further.

The next who has shared his sentiments is Tim Seymour from the CNBC Trading Desk, who has since shared that:

“You actually are above that trend line, which probably takes you up to around $6,800. You got to a 95 nine-day RSI. Even for bitcoin, that was extreme.”

Finally, we have derivatives trader and analyst, Tone Vays who has since described the event as resulting in a “beautiful short trade.” He also noted that, in his opinion, buying “along the way” isn’t the best strategy but waiting until its possible low before buying more.

As for what he predicts in terms of BTC’s value to come, here’s what he was quoted saying:

“I actually think we are going to go down and I think we are going to go sub-$6,000 on this one […] I even think we’re going to go below $5,000 as well.”

If the aforementioned is the case, this would be a great opportunity for those who’ve missed the BTC train when it was sitting at below $6,000 in most of 2018.

With all this being shared, where do you stand? Are you for crypto bulls or bears? Let us know why in the comments below.

<span data-sheets-value="{"1":2,"2":"

Bitcoin’s price is $7,284.49 BTC/USD exchange rate today. The real-time BTC market cap of $128.99 Billion currently ranks #1 with a chart dominance at 56.25%, daily trading volume of $6.05 Billion and live coin value change of BTC 2.78 in the last 24 hours.

Live Bitcoin (BTC) Price:

1 BTC/USD =$7,284.4893 change ~ 2.78%

Coin Market Cap

$128.99 Billion

24 Hour Volume

$6.05 Billion

24 Hour VWAP

$7.33 K

24 Hour Change

$202.4735

var single_widget_subscription = single_widget_subscription || []; single_widget_subscription.push("5~CCCAGG~BTC~USD");

"}” data-sheets-userformat=”{"2":14849,"3":{"1":0},"12":0,"14":[null,2,0],"15":"Open Sans","16":11}”>Bitcoin’s price is $7,284.49 BTC/USD exchange rate today. The real-time BTC market cap of $128.99 Billion currently ranks #1 with a chart dominance at 56.25%, daily trading volume of $6.05 Billion and live coin value change of BTC 2.78 in the last 24 hours.

<span data-sheets-value="{"1":2,"2":"

"}” data-sheets-userformat=”{"2":513,"3":{"1":0},"12":0}”>Latest Bitcoin Price Updates and Real-Time News Analysis

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John McAfee Emerges, Reportedly Says Americans Are ‘Hated Universally’

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By CCN: In a new interview with Newsweek, John McAfee surfaced to discuss living abroad and what he’s learned about the global perception of Americans. After recently going dark, he told Newsweek “we’re hated universally.” According to him, the reason most American tourists don’t pick up on this fact is that they’re a source of income for the people and places they visit.

America: Hated Universally

“I have traveled around the world. Everybody hates America. Do they show it? No. If you’re a tourist, you’re never going to see it. Why? If you’re a tourist you are a source of income for that country. You’re never going to see the truth. Well, I’ve lived in these countries, and I’ve seen the f***ing truth. We’re hated universally. We interfere in affairs that we do not understand for our own benefit….”

McAfee, who is wanted by the U.S. government for tax fraud, is currently running for president. The software mogul invited this attention from federal authorities when he openly flaunted his tax evasion just after the new year. Later that month, federal authorities issued an indictment. While felons are legally allowed to run for president, it’s unclear if McAfee would be able to assume the office with a standing warrant hanging over his head.

Can a Fugitive Even Run for President?

Since 2000, the Justice Department has abided by the opinion that it cannot prosecute someone in the highest office.

This past week, rumors spread on Twitter that authorities captured McAfee.

The @officialmcafee account has since dispelled these rumors:

McAfee isn’t losing sleep over his situation with U.S. authorities and has no idea what it will take for him to return home.

“I don’t have a clue. I haven’t thought about it yet. I don’t address problems until I’m ready to actually do something. First of all, get a bunch of lawyers. Secondly, come back, I don’t know.”

McAfee’s Brashness as an Asset

McAfee wants you to know that he doesn’t care what you think of him. This is unusual for someone with political aspirations but certainly not new. McAfee draws the line at what is written about him, saying:

“I’m just being me. I’m not going to change me to be untrue or rather false or restricted while I’m trying to make you be unrestricted. That makes no sense. No, we should all be unrestricted. We should all give a shit nothing about what people think or say about us. We should give a shit about what’s written about us. We give a shit about our impact on the world, if we do something, which is absolutely us. No. I could care less about that, sir. I’m not creating a brand, I’m not creating an image.”

The security mogul says he has untold numbers of people working on his campaign in the U.S. and hundreds of people working in foreign countries for him. The multi-millionaire, for all his “not giving a sh*t,” is a Twitter celebrity. He likely wields little impact beyond that for the majority of the voting public.

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Might as Well Vote for Satoshi Nakamoto

A serious proponent of Bitcoin and blockchain technologies, McAfee throws off very little actual expertise on the subject. Here is his recent assessment of Ethereum, the second-most valuable cryptocurrency and the most-used platform for smart contracts:

McAfee also seems to believe he knows the identities of Satoshi Nakamoto. He previously said he would reveal Satoshi’s true identity to prove that Craig S. Wright is lying. However, on apparent legal advice, he chose not to disclose the identity, believing that it would further complicate his problems with the U.S. government.

Raw, gifted, and eccentric, John McAfee could be the type of leader who’d sufficiently “drain the swamp” because he holds no allegiance to any part of it. Unfortunately for him, his prospects are even less likely than those of virtually all Democrats currently running campaigns.

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Amazon Patent Casts Light on Plans to Create Proof-of-Work Blockchain Analog

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Retail behemoth Amazon has received a patent for generating Merkle trees as a solution to the proof-of-work (PoW) algorithm, a document confirmed on May 14.

Amazon, which has taken an increasing interest in blockchain technology in recent times, now appears to be targeting development of a specific variation of the instrument.

Specifically, the patent targets Merkle trees — a data verification tool — to constitute the work required in a PoW setup.

PoW is the algorithm used in bitcoin (BTC) and some other major cryptocurrencies such as litecoin (LTC), dogecoin (DOGE) and monero (XMR).

“This document describes techniques for using the generation of Merkle Trees as a solution to a proof-of-work challenge,” the patent reads.

The exact nature of Amazon’s plans remains unclear. The patent document does not reference specific uses within a cryptocurrency or blockchain, continuing uncertainty over the company’s stance on the wider cryptocurrency phenomenon.

As Cointelegraph reported, rumors Amazon was preparing to take a direct interest in bitcoin, for example, have repeatedly sparked a frenzy within the crypto community, each time culminating in nothing.

At the same time, others consider it only a matter of time before an integration occurs. In February, Changpeng Zhao, CEO of exchange Binance, claimed Amazon would ultimately have no choice but to issue some form of cryptocurrency.

“For any internet (non-physical) based business, I don’t understand why anyone would not accept crypto for payments,” he said.

Late last month, Amazon Web Services publicly launched its enterprise blockchain setup network, based on Ethereum (ETH) and Hyperledger technology.

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Neutral launches platform for stablecoin deposits into an aggregated basket

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Neutral, the open financial protocol for decentralized financial instruments, has today announced the launch of the Neutral Platform, allowing users to deposit stablecoin assets into Neutral Dollar (NUSD). Neutral Dollar, a next-generation stablecoin pegged to an aggregated basket of stablecoins initially comprising of DAI, PAX, TUSD, and USDC, will enable deposits of these constituent coins from May 16th, 2019 via various methods such as a desktop client or decentralized application (dApp).

“The launch of the Neutral Platform marks the beginning of our users journey into a better stablecoin with unprecedented levels of liquidity while presenting an asset with better stability and diversified risk. This platform will enable users to manage positions between stablecoins in a much more seamless and intuitive way.”

Matthew Branton, CTO of Neutral and Architect of Neutral Dollar

The Neutral Platform, available to download now, will present users with an overview of the Neutral Dollar basket, its value, and the distribution of each of its weighted constituent coins. From May 16th, 2019, users will be able to deposit constituent coins into their Neutral Dollar Basket, officially marking the launch of the Neutral Dollar system. The Neutral Dollar system is powered by Neutral’s smart contract protocol.

Neutral Dollar’s current peg of DAI, TUSD, PAX, and USDC is based on modeling by Neutral to find the combination of stablecoins needed to achieve maximum stability. A pricing mechanism ensures consistent weighting for each component relative to the overall basket and adjusts the basket in reaction to price fluctuations. Rigorous testing indicates that Neutral Dollar is significantly less volatile than any other stablecoin on today’s market with its current basket composition.

Branton concluded, “Our mission at Neutral is to bring superior decentralized financial products to the crypto finance space. We are moving to solve the problem of unexpected volatility in the stablecoin space, which is an enormous trap for investors, along with the lack of liquidity in the space. This announcement brings us one step closer to this goal and is a milestone on the way to reshaping the industry.”

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Blockchain as Key to Vienna’s Digital Future — Interview with Ulrike Huemer, CIO of Vienna, Austria

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Austria is Europe’s leader in terms of applying modern day technology to better the all-around welfare of its citizens. Making cities “smart” and digital is a key part of transforming public goods and services in order to reach that goal. Vienna is especially keen on innovation, trying to find new solutions by way of digitization. Easy access and clear-cut benefits are key aspects to finding broad acceptance among Vienna citizens, making them willingly partake and help to better the transformation process.  

To further the breakthrough of digital technologies and make them the backbone of society, Vienna called into existence the so-called “Smart City Vienna” initiative in 2014, which aims to better the lives of its general population. The Smart City project isn’t meant to merely foster technology, though. Rather, the latter is supposed to be a tool, helping to achieve social change and making the city more livable overall. Technology as a servant to humanity, not the other way around.

The Smart City Vienna strategy takes into consideration multiple fields that need to be transformed, such as energy, mobility, real estate and others. Every single aspect of the strategy has well-defined target objectives in order to provide transparency and a sense of urgency. In total, 38 target objectives are set out until 2050, while different milestones are to be met by 2025, 2030 and 2050.

Blockchain is a key factor in realizing these goals. As such, it has been applied to different use cases that pertain to the strategy in one way or another. One of them is the notarization of Open Government Data (OGD) — to facilitate the use of food stamps by local government employees. Electric supplier Wien Energie, which is run by the city administration, has also been exploring the use of blockchain technology for quite a while now, trying to make distribution along its grids more efficient. Last but not least, Vienna is setting up a blockchain-based token that is part of an incentive driven initiative, rewarding citizens for “good behavior.”

In which ways can blockchain contribute to Smart City Vienna further? Will the capital city get its very own cryptocurrency eventually? Why is digitization so broadly accepted among Vienna’s population? Cointelegraph Germany sat down with Ulrike Huemer, the chief information officer of Vienna, to answer these questions and to further elaborate on what’s to come.

Smart City Vienna — the road to digitization

Cointelegraph: What is your vision of Vienna as a “smart” city?

Ulrike Huemer: Vienna does score favorably well in many different rankings already, some of it due to our comprehensive approach to the Smart City initiative, which constantly drives new projects and gets monitored on a regular basis. Our comprehensive approach isn’t just a means to an end, though. It is much rather our guiding principle to cover all our bases when making our city “smart.” It’s not just about technological innovation for the sake of it — instead, we are looking to use it as a vehicle leading us toward social change and environmental sustainability. It’s all about providing the best quality of life to all our citizens, thus we are incorporating every office of city administration, linking them up with companies from the private sector as well, to set up a broad network as a basis for the transformation process.

“It’s all about providing the best quality of life to all our citizens.”

We don’t just emphasize these points toward the general public, we also make sure to reiterate this concept internally to really make it stick. Driving research and development-oriented policies is key, but so is getting everybody on board with what we’re trying to do. Consulting-firm Roland Berger ranked our digital agenda number one in its recent “Smart City Index” publication, especially praising our continued efforts to better the health care system through technological innovation. Open Government Data and our progress in areas such as mobility, environmental sustainability and education put us in the top-spot according to the study. We’re looking to continue to build on this, truly making Vienna a “smart city” indeed.

CT: How well is Austria positioned in terms of the smart city concept? Is Austria in a good starting position for this?

UH: Austria is well positioned to master future challenges due to the various public infrastructure frameworks. The smart city concept can play a key role here. The most important aspect is the implementation and cooperation with relevant actors. The very first thing to ensure when dealing with the smart city topic is to create adoption through a broad process. Civil society, the economy and science must be given the opportunity to state their interests to the city administration so that we get the big picture of a future that is worth striving for by all parties. By integrating all interest groups, we can ensure the holistic nature of this strategy. Finally, to establish such an agenda, political support and an evaluation process that makes successes and potentials visible are needed.

CT: Implementing a smart city is enormously expensive. Who is paying for these digitization measures that are necessary?

UH: There is no direct answer to this question. It’s a fact that, as of now, the city of Vienna does not have an additional budget for the current smart approaches. Therefore, the individual departments and actors have to use their existing budgets and try to innovate their sovereign work themselves. Furthermore, there is some extra funding provided by the European Union or by national co-financing. In recent years, this has brought an additional investment volume of around 15 to 20 million euros to Vienna.

Blockchain solutions for the city of the future

CT: What is blockchain technology‘s role within the Smart City of Vienna?

UH: The city of Vienna has been exploring blockchain technology proactively. We want to use this technology to drive the city’s digitalization and the associated guiding themes of transparency, openness, trust and citizen participation.

We chose to use the technology for our own processes, to proactively shape the development and to support the promotion of it. From the start, we knew the only way to test the blockchain technology‘s potential was by “learning by doing.” This is why we launched pilot projects that were implemented successfully. The pilots‘ primary goal was to build the necessary expertise within the city administration and in our ICT [information and communications technology] municipal department named Magistratsabteilung  01 – Wien Digital.

“From the start, we knew the only way to test the blockchain technology‘s potential was by “learning by doing.”

Via the DigitalCity.Wien-Blockchain.Initiative, we are connecting key areas such as identity, education and research with the blockchain community in Vienna, thereby strengthening both the stakeholders and Vienna as a blockchain location.

CT: The city of Vienna provides open data and e-government for its citizens. How does blockchain improve the administration?

UH: In December 2017, a unique solution was published in Europe where Open Government Data was secured using blockchain. The City of Vienna’s first blockchain pilot dubbed “Open Data Notarization” was focused on the acquisition of knowledge on blockchain technology. The city of Vienna‘s OGD checksums are stored publicly on blockchains and are available to the public. Thus, anyone can view and check the authenticity and history of the data themselves, eliminating the need for middlemen.

The solution is being used now and is set to encompass all data records of Austria‘s administration located on Austria’s data portal in the following weeks.

CT: Wien Energie is researching the use of blockchain technology, also collaborating with the city of Vienna on Smart City concepts. Are there any blockchain solutions regarding sustainable energy you could tell us about?

UH: Blockchain technology allows us to scale innovative energy solutions. Let’s use microgrids as an example: These small and decentralized networks are completely autonomous, connecting supplier and consumer in the shortest way possible, reducing the loss of power to a minimum. On top of that, they eliminate the need to expand the main grid, which can be quite expensive.

We’re also exploring so-called energy-sharing via blockchain. In order to do so, we are setting up a blockchain infrastructure in the “Viertel Zwei” research district, connecting it to the existing power supply.

CT: The city of Vienna is using blockchain as part of the so-called “City Token Initiative,” which got started in collaboration with the research institute of the crypto economy at the Business University Wien (WU). Could you please specify what the initiative is all about?

UH: Sure! At its core is the idea to get people engaged, making them care about their surroundings and setting incentives for them to contribute to the betterment of the city. We created the so-called “Culture Token” to foster this idea, acting as a reward for any type of good behavior as defined by the initiative. In return, citizens can use the token to get access to arts and culture around the city. As an example, we are looking to reduce carbon emissions by rewarding citizens for leaving their car behind, having them take a walk instead and earning tokens in the process.  

“The core idea of our ‘Culture Token’ is, to get people engaged […] setting incentives for them to contribute to the betterment of the city.”

CT: How are these “Culture Tokens” set up?

UH: The “Culture Token” exists in digital form only, being made available on mobile phones and tablet computers. It is set up as a reward system, but stands in stark contrast to the Social Credit System run by the Chinese government. The city of Vienna is keen to exclusively use technology to the benefit of its citizens. It is supposed to simply reward people for volunteer work, for doing good in many ways. We are trying to broaden the scope of the token, too — not only tying it to arts and culture, but establishing it as a true means of payment for many different services instead. That way, it wouldn’t merely be a “Culture Token,” but much rather a “Vienna Token,” which really is the long-term goal.

CT: Are there any further plans to use blockchain in the context of the Smart City initiative?

UH: We’re looking to make use of our findings from the aforementioned “Open Data Notarization” project. In collaboration with our partners, we want to establish a notarization service that can be applied in many different fields. For example, helping to notarize city government documents or to further “machine learning.” Another important topic is self-sovereign identity, which is concerned with being in full control of one’s own data — blockchain technology can be of assistance here, as well. There is an abundance of use cases, though, like the Internet of things (IoT) and related applications. We will most likely integrate blockchain into different devices and supply chains, too, wherever we see fit.

CT: Is the city of Vienna looking to issue its very own cryptocurrency?

UH: No. As a city, we are merely acting as an observer. At some point in time, blockchain technology might be used as a means of payment, though, since it can help to improve financial transactions considerably.

Creating dialogue

CT: What is the role of big technology companies in the city of Vienna? The Smart City initiative could be of great commercial use for them, especially in combination with blockchain, artificial intelligence, IoT and big data, couldn’t it?

UH: All our partnerships are supposed to provide mutual benefits to either side — technology companies are no exception. As such, the Smart City initiative does indeed establish a framework to strengthen existing partnerships through technological advancements. The overarching goal is to better the quality of life in Vienna, though, which is our main premise.

The “DigitalCity.Vienna” initiative is aiming to establish Vienna as a European leader for digitization, and we are looking to market the city accordingly. The DigitalCity.Vienna initiative has an open format, accessible to all parties interested. We are doing our best to connect all parties involved, helping them to find common ground along the way. In regularly scheduled events, we’re sitting down major companies, ascending startups, the city government, public authorities and academic institutions in order to create a running dialogue in the digital ecosystem.

“The ‘DigitalCity.Vienna’ initiative is aiming to establish Vienna as a European leader for digitization, and we are looking to market the city accordingly.”

CT: What kind of government assistance does Vienna need in order to stay ahead in the global race for blockchain adoption?

UH: We want to strengthen existing partnerships in this area, while attracting further blockchain projects to Vienna in order to benefit from their expertise in the long term. Intricate knowledge is crucial when it comes to blockchain, that is why we are adamant about building it up and retaining it. A prime example is the Austrian Blockchain Center, which is doing research on many different blockchain use cases. The research center recently settled down in Vienna, and we intend on keeping it here, providing some of its funding as well. It will take these kinds of projects, plus government assistance and close collaboration with the private sector, to make Vienna a major international blockchain city.

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